YOU ASK:

What is the definition of Insurance Pool?

WE ANSWER:

An Insurance Pool refers to the collection of assets that is created by a group of insurance companies. These assets enable the insurance companies to provide insurance to a high risk account, something which only one insurance company cannot do by itself (for instance, the coverage of a nuclear power station).

There may also be pools created for the kind of insurance that the insurance companies are unwilling to sell in the voluntary market but something that the state requires them to cover. An example of this will be flood insurance offered to flood-prone areas.

The payout for these kinds of risk are not sourced from the individual company's assets, but from the assets jointly kept in the pool.

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